The stock of ONGC (₹133.70) is ruling at a crucial level. A conclusive close above ₹134 will change the short-term outlook positive for ONGC, which faces resistances at ₹144 and ₹156. On the other hand, ONGC faces an immediate support at ₹122 and a close below ₹109 will change the outlook negative for ONGC.
The company will declare its second quarter results on November 14. As the result is round the corner, we expect ONGC to move in a narrow range with a positive bias.
F&O pointers: ONGC October futures witnessed a healthy rollover of nearly 95 per cent to November series. Besides, ONGC November futures witnessed a steep accumulation of open interest positions from 42.42 lakh shares to 3.97 crore shares in the last 10 trading days. The ONGC November futures at ₹134.45 maintains a marginal premium over spot close of ₹133.70. Option trading indicates that the stock could move in ₹125-140 range.
Strategy: We advise traders to consider a plain-vanilla call strategy on ONGC. This can be executed by buying 137.50-strike call. The option closed with a premium of ₹2.95, which means the strategy will cost traders ₹11,357.50 (market lot: 3,850 shares). If ONGC opens on positive note, traders can enter the counter between ₹3 and ₹3.25.
We advise traders to book profit if the premium rises to ₹6-6.50 or exit with a loss if premium dips to ₹0.75. Stop-loss can be placed at ₹3.75 once the premium moves past ₹4.25. However, if the stock opens sharply higher, traders can stay from this strategy.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading.